TRW & Co · Employment & Immigration
Executive Employment in the UAE
Executive employment in the UAE combines a statutory floor with high-value contractual terms: package structure, incentives, corporate office, covenants and exit. The applicable regime depends on whether the employer sits onshore, in a free zone, in the DIFC or in the ADGM, and each treats gratuity, notice and settlement differently. Getting the structure right at hiring prevents costly exits.
Key pointGratuity onshore and DEWS contributions in the DIFC are both calculated on basic wage, while the ADGM's 2024 regulations removed the two-year gratuity cap, so the same executive package can cost very different amounts to unwind depending on the employing entity.
At a glance
No three-year cap
Federal Decree-Law No. 14 of 2022 removed the three-year limit on onshore fixed-term contracts, so executive terms can be agreed and renewed for any period.
Gratuity follows basic wage
Onshore gratuity is 21 days' basic wage per year for five years and 30 days thereafter, capped at two years' wage, unless an approved savings scheme applies.
DIFC uses DEWS
DIFC employers contribute 5.83 per cent of basic wage for the first five years and 8.33 per cent after that to a qualifying savings scheme.
ADGM 2024 regulations
From 1 April 2025, ADGM removed the gratuity cap, introduced statutory garden leave and barred employers from paying in lieu of notice unilaterally.
Office is separate
Ending employment does not remove an executive as manager, director or attorney; resolutions, register filings and revocations are needed separately.
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What executive employment in the UAE involves
Executive employment in the UAE covers the hiring, rewarding, governing and exiting of the people who run a business: chief executives, country heads, finance directors, general managers, partners in regional hubs and senior specialists. The statutory floor is the same as for any employee, but the money, authority and reputational exposure are larger, so the drafting choices matter far more.
A senior hire in Dubai or Abu Dhabi typically touches five legal layers at once: the employment regime that applies to the employing entity, corporate law for any directorship or manager appointment, immigration for residence and work authorisation, incentive plans governed by their own documents, and the tax and social security rules of the executive's home country. Problems arise when each is drafted by a different adviser and nobody checks the joins.
This page focuses on the employment side of senior hires. Relocation logistics and long-term residence are covered in our senior executive relocation and golden residency planning practices.
Which regime governs executive employment in the UAE
The first question in any executive employment in the UAE is which law governs the contract. That depends on where the employing entity is licensed and where the executive works, not on the governing-law clause the parties prefer.
Onshore and most free zones
Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations and Cabinet Resolution No. 1 of 2022 apply to mainland private-sector employers and, in most respects, to free zone employers. Contracts are registered with MOHRE or the free zone authority. Since Federal Decree-Law No. 14 of 2022 removed the earlier three-year cap, fixed-term contracts can be agreed for whatever period suits the parties, and renewed. The texts are on the UAE Legislation portal.
The DIFC
Employers in the DIFC are governed by DIFC Law No. 2 of 2019, the DIFC Employment Law, as amended. Instead of end-of-service gratuity, employers contribute to a qualifying workplace savings scheme such as DEWS, at 5.83 per cent of basic wage for the first five years of service and 8.33 per cent after that. Disputes go to the DIFC Courts.
The ADGM
Employers in the ADGM are governed by the ADGM Employment Regulations 2024, in force since 1 April 2025. The new regulations removed the two-year cap on end-of-service gratuity, made gratuity payable on termination for any reason, created a statutory garden leave right, stopped employers paying in lieu of notice unilaterally, and made a compliant settlement agreement the only way to waive statutory rights.
| Term | Onshore (Decree-Law 33 of 2021) | DIFC (Law No. 2 of 2019) | ADGM (Regulations 2024) |
|---|---|---|---|
| Probation | Up to six months | Up to six months | Up to six months |
| Notice | Contractual, between 30 and 90 days | Statutory minimums of 7, 30 or 90 days by length of service; contract may be longer | Contractual, with statutory minimums; no unilateral pay in lieu |
| Leaving benefit | Gratuity of 21 days' basic wage per year for the first five years and 30 days thereafter, capped at two years' wage, or an approved alternative savings scheme | Employer contributions to a qualifying scheme such as DEWS | Gratuity with no two-year cap, payable on any termination |
| Garden leave | Contractual | Contractual | Statutory right |
| Post-termination non-compete | Up to two years, with statutory exceptions | Contractual reasonableness test | Contractual reasonableness test |
| Disputes | MOHRE, then emirate labour courts | DIFC Courts | ADGM Courts |
Structuring the executive package
Executive packages in the Gulf are often built from habit: a modest basic salary, generous housing, transport and schooling allowances, and a large discretionary bonus. That structure has legal consequences that many boards only notice at exit.
Basic wage versus allowances
Onshore gratuity is calculated on basic wage, and DIFC scheme contributions are calculated on basic wage. A low basic salary keeps those costs down, but it also signals the cost of an exit to the executive, who may negotiate a contractual severance instead. Be deliberate: decide the economics of departure on day one and record them, rather than leaving them to a dispute over what counted as wage.
Bonus and long-term incentives
Discretionary bonus clauses should say who decides, on what criteria, when it is paid and whether the executive must be employed and not under notice on the payment date. Long-term incentives, share options and phantom equity sit under plan rules that need good-leaver and bad-leaver definitions consistent with the employment contract. DIFC and ADGM vehicles are often used to hold plan shares. Malus and clawback provisions should be expressly agreed, not assumed. Our article on employee share option plans covers plan design.
Hours, leave and senior carve-outs
Onshore working-time rules carve out certain senior management and supervisory roles that exercise the employer's authority, but annual leave, sick leave and other statutory entitlements still apply. Executives should not be told they have "no fixed hours" as a substitute for a clear contract; the carve-out depends on the actual role.
Insurance and protection
Executives employed onshore are generally required to subscribe to the federal Involuntary Loss of Employment scheme. UAE and GCC nationals in senior roles must be registered with the General Pension and Social Security Authority or the relevant emirate pension fund. Directors' and officers' insurance and an indemnity should be in place before the executive signs anything on the company's behalf.
Immigration status and Emiratisation
Every executive working onshore needs a work permit linked to the employer, and residence through either the employer or a long-term route. Many senior hires now qualify for a Golden Visa, a renewable long-term residence visa that does not depend on an employer sponsor.
That changes the dynamics of executive employment in the UAE: an executive with independent residence can leave without visa cancellation pressure, and the employer loses one practical lever at exit. A Golden Visa does not remove the need for a work permit through the employer, so the permit should still be in place before the executive starts.
Emiratisation also affects senior hiring. Mainland employers within the MOHRE targets must grow the share of UAE nationals in skilled roles, and senior national hires count. Boards planning leadership succession should consider how executive appointments interact with those targets, which our Emiratisation compliance page explains.
The cheapest time to agree what an executive exit will cost is before the executive starts. The most expensive is after the board has lost confidence.
Executives as directors, managers and signatories
Many executives hold a corporate office as well as a job. Under the Commercial Companies Law, Federal Decree-Law No. 32 of 2021, an onshore limited liability company is run by one or more managers appointed under its articles, and a joint stock company by a board. Free zone, DIFC and ADGM companies have their own registers of directors and officers.
Employment and office are legally separate. Ending the employment contract does not remove the person as a manager, director or authorised signatory, and removing the office does not end the employment. Each needs its own process: board or shareholder resolutions, register filings, revocation of powers of attorney and bank mandates. Executive contracts should oblige the executive to resign offices on termination and authorise the company to make filings if they do not.
Senior executives also carry personal exposure. Directors and managers can face liability under company law for mismanagement, and in some cases under bankruptcy, tax and anti-money laundering rules. Our directors' duties and liability practice covers the corporate layer.
The executive lifecycle: from offer to exit
- Choose the employing entity. Confirm whether the executive will be employed onshore, in a free zone, in the DIFC or in the ADGM, and whether a split or secondment structure is needed for a regional role.
- Agree the term sheet. Fix basic wage, allowances, bonus, incentives, notice, garden leave, covenants and severance in a term sheet before the formal contract is drafted.
- Align the paperwork. Make sure the MOHRE or free zone contract, the service agreement, incentive plan rules and any side letter say the same thing. Onshore, the registered contract is the reference point in any dispute.
- Complete immigration. Obtain the work permit and residence through the employer, or confirm the basis on which a long-term visa holder will work, before the start date.
- Appoint to office. Pass resolutions, update registers, grant limited powers of attorney and record authority limits.
- Review annually. Revisit incentive vesting, covenants and role changes, particularly after promotions or regional expansions that change the executive's access to clients and information.
- Plan the exit. Agree the route, the announcement, garden leave, the treatment of incentives and a settlement agreement, then remove offices, cancel the visa and pay final dues within the statutory period.
Negotiated exits and settlement agreements
Most executive departures in the UAE end by agreement. Onshore, final dues must be paid within 14 days of the contract ending, and an employer that terminates arbitrarily can be ordered to pay compensation of up to three months' wage in addition to notice and gratuity. For a senior executive, the real exposure is usually elsewhere: unvested incentives, contractual bonus, reputational risk and the time a dispute takes.
A settlement agreement should record the termination date and reason, every payment and its basis, the treatment of incentives, confidentiality and non-disparagement, return of property, resignation from offices and a release of claims. Onshore, provisions that reduce statutory rights are vulnerable, so payments should be framed as at least meeting the statutory minimum. In the ADGM, a waiver of statutory rights is effective only through a settlement agreement meeting the regulations' criteria.
When an exit becomes a dispute
If negotiation fails, the forum follows the regime. Onshore, the executive must first file a complaint with MOHRE, which attempts settlement and refers larger claims to the labour courts; claims must be brought within two years of the end of employment. In the DIFC, claims under the Employment Law must be brought within six months of termination, and higher-value or complex claims go to the Court of First Instance rather than the Small Claims Tribunal. ADGM claims are heard by the Employment Division of the ADGM Courts.
For executive employment in the UAE, these differences in time limits are often decisive, so record the termination date precisely. Our employment disputes page sets out each route.
Our termination and end-of-service benefits practice covers the mechanics, and our restrictive covenants page explains how post-exit restraints work.
Documents to assemble
Service agreement and registered contract
The full executive agreement and the MOHRE or free zone contract, checked for consistency on wage, title, notice and term.
Incentive documentation
Plan rules, grant letters, vesting schedules and leaver provisions, plus board approvals for each award.
Corporate authority record
Resolutions appointing the executive, powers of attorney, bank mandates and the delegation-of-authority matrix.
Policies and acknowledgements
Code of conduct, conflicts, data protection, dealing and anti-bribery policies, signed by the executive on joining and updated over time.
Risks and common mistakes
Two contracts that say different things
Onshore employers often register a short standard contract with MOHRE and sign a longer service agreement separately. If the two conflict on wage, notice or term, the executive will rely on whichever is more favourable, and the registered contract carries particular weight before MOHRE and the courts. Draft the service agreement first, register terms consistent with it, and include a clause explaining how the documents relate. Review both whenever pay or title changes, because amendments are often recorded in one document only.
Treating an executive as a consultant
Some groups engage a regional head through a consultancy agreement to avoid local employment formalities. If the person works under the company's direction, in the UAE, as part of its organisation, the relationship may be treated as employment, with permit, gratuity and payroll consequences. A consultant working in the UAE also needs a lawful basis to work. Where a non-employment model is genuinely wanted, structure it properly, and consider the tax presence it may create for the foreign group.
Leaving incentives disconnected from the contract
Plan rules drafted at group level may define good leavers by reference to English or US concepts that do not map onto UAE termination routes. An executive dismissed onshore for a reason later found arbitrary may argue for good-leaver treatment, or for compensation for lost awards. Align leaver definitions with UAE termination categories, state whether awards form part of wage, and require board discretion to be exercised in writing.
Forgetting to remove offices and powers
An executive who leaves employment but remains on the commercial register as manager, or still holds a power of attorney, can continue to bind the company or expose it to liability. Banks and counterparties rely on the register. Build office resignation and filings into the exit plan and the settlement agreement, revoke powers of attorney formally, and update bank mandates before the announcement.
Missing the DIFC or ADGM differences
Groups with entities in both mainland Dubai and the DIFC sometimes use one template. That can leave a DIFC executive without proper scheme contributions or an ADGM executive with a gratuity cap that no longer exists. In the ADGM, an employer can no longer pay in lieu of notice unilaterally. Maintain separate templates for each regime and train HR on the differences.
The cross-border angle
Executive employment in the UAE is frequently international. A finance director may be seconded from London, a country head may report to Singapore, and a founder may split time between Dubai and Dhaka. Each brings home-country rules on tax residence, social security and employment protection that can apply alongside UAE law.
The UAE does not levy personal income tax on employment income, which is a central part of the attraction, but the executive's home country may continue to tax them unless residence is properly ended. For the employer, a senior executive concluding contracts from the UAE on behalf of a foreign group company can create a taxable presence for corporate tax. Split contracts and secondments need careful drafting so that each entity's obligations are clear. See our cross-border workforce planning and corporate tax pages.
Executives recruited from India, China or Saudi Arabia may also hold obligations under prior employers' covenants or regulatory approvals in those markets. Checking them before the offer avoids a dispute that starts on the first day.
How TRW & Co helps
TRW & Co advises boards, investors and executives on executive employment in the UAE, from the first term sheet to the final settlement. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.
Senior hires
Term sheets, service agreements and regime-specific templates for onshore, free zone, DIFC and ADGM employers, coordinated with immigration and office appointments.
Incentive alignment
Review of bonus, share and phantom plans against UAE termination routes, including leaver definitions, malus and clawback.
Executive exits
Exit strategy, settlement agreements, removal from office, incentive treatment and communications for boards or departing executives.
Regional structures
Secondments, dual contracts and group mobility for executives working across the UAE, UK, Singapore, Saudi Arabia, India and Bangladesh.
Explore our practices for related corporate and tax support.
Checklist for decision-makers
For executive employment in the UAE, decide the governing regime, the exit economics and the incentive treatment before the offer letter goes out. Retrofitting any of them after a dispute starts is costly.
- Confirm the employing entity and whether onshore law, the DIFC Employment Law or the ADGM Employment Regulations 2024 apply.
- Set basic wage deliberately, knowing it drives gratuity or scheme contributions.
- Align the registered contract, service agreement and plan rules.
- Record notice, garden leave, covenants and any contractual severance clearly.
- Separate employment from office, and plan resignation from directorships and powers of attorney.
- Check ILOE, pension registration for nationals and D&O cover.
- Review home-country tax and covenant exposure before the start date.
- Use a written settlement agreement for every negotiated exit.
To discuss a senior hire or exit, contact TRW & Co at info@trw.co.
Frequently asked questions
01Do UAE executives have to be on fixed-term contracts?
Onshore, employment contracts under Federal Decree-Law No. 33 of 2021 are fixed-term, but since Federal Decree-Law No. 14 of 2022 removed the three-year cap, the parties can agree the length and renew it. For executives this means the term can match a business plan or investment horizon. DIFC and ADGM contracts are not subject to the onshore fixed-term rule and follow their own employment legislation, so the term is a matter of agreement.
02How is end-of-service gratuity calculated for a senior executive?
Onshore, gratuity is based on basic wage only: 21 days for each of the first five years of service and 30 days for each year after that, capped at two years' wage, unless the employer participates in an approved alternative savings scheme. Allowances and bonuses are generally excluded. In the DIFC, employers instead contribute to a qualifying scheme such as DEWS. In the ADGM, gratuity remains but the two-year cap was removed from April 2025.
03Can a company pay an executive in lieu of notice?
Onshore and in the DIFC, payment in lieu is commonly provided for in the contract and agreed at exit. In the ADGM, the Employment Regulations 2024 do not allow the employer to make a payment in lieu unilaterally, so the contract and the exit should be structured around garden leave or agreement. Whatever the regime, the right to pay in lieu should be written into the contract rather than assumed.
04Is a director of a UAE company automatically an employee?
No. A manager of an onshore LLC or a director of a free zone, DIFC or ADGM company holds a corporate office that is legally separate from employment. Many executives hold both, but each has its own appointment and removal process. Ending the job does not remove the person from the commercial register or revoke their powers of attorney, so both must be dealt with on exit.
05What can an executive claim if dismissed arbitrarily onshore?
Under the Labour Law, compensation for arbitrary dismissal is assessed by the court by reference to the type of work, the damage suffered and length of service, and cannot exceed three months' wage based on the last wage. That is in addition to notice pay, gratuity and other dues. For senior executives, the larger issues are often contractual bonuses and incentives, which depend on the plan rules and the contract.
06Do executives need ILOE insurance?
Most private-sector employees onshore, including senior staff, are required to subscribe to the federal Involuntary Loss of Employment scheme, which provides limited income support after involuntary job loss. The benefit is capped, so for executives it is a compliance step rather than meaningful protection. Employers should check subscription during onboarding, because non-subscription can lead to fines and complications when the employee changes jobs.
07Should an executive's incentive plan be governed by UAE law?
Group plans are often governed by English or another foreign law, which is workable, but the leaver definitions must make sense against UAE termination routes and the employment contract. Where awards are held through DIFC or ADGM vehicles, the relevant centre's company law applies to the holding structure. The key is consistency: the plan, grant letter and contract should give the same answer on what happens when the executive leaves.
Sources and official materials
- Ministry of Human Resources and Emiratisation — Onshore contracts, permits and labour regulation
- UAE Legislation portal — Labour Law, Commercial Companies Law and amendments
- Dubai International Financial Centre — DIFC Employment Law and DEWS
- Abu Dhabi Global Market — ADGM Employment Regulations 2024
- Involuntary Loss of Employment scheme — Federal unemployment insurance subscription
- General Pension and Social Security Authority — Pension registration for UAE and GCC nationals
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
